Montpellier Ocr. 30. 1828
In my letter of September 18th. I stated briefly the grounds on which I rested my opinion that a power to impose duties & restrictions on imports with a view to encourage domestic productions, was constitutionally lodged in Congress. In the observations then made was involved the opinion also, that the power was properly there lodged. As this last opinion necessarily implies that there are cases in which the power may be usefully exercised by Congress, the only Body within our political system capable of exercising it with effect, you may think it incumbent on me to point out cases of that description.
I will premise that I concur in the opinion that, as a general rule, individuals ought to be deemed the best judges, of the best application of their industry and resources.
I am ready to admit also that there is no Country in which the application may, with more safety, be left to the intelligence and enterprize of individuals, than the U. States.
Finally, I shall not deny that, in all doubtful cases, it becomes every Government to lean rather to a confidence in the judgment of individuals, than to interpositions controuling the free exercise of it.
With all these concessions, I think it can be satisfactorily shewn, that there are exceptions to the general rule, now expressed by the phrase "Let us alone," forming cases which call for interpositions of the competent authority, and which are not inconsistent with the generality of the rule.
1. The Theory of "Let us alone," supposes that all nations concur in a perfect freedom of commercial intercourse. Were this the case, they would, in a commercial view, be but one nation, as much as the several districts composing a particular nation; and the theory would be as applicable to the former, as to the latter. But this golden age of free trade has not yet arrived: nor is there a single nation that has set the example. No nation can, indeed, safely do so, until a reciprocity at least be ensured to it. Take for a proof, the familiar case of the navigation employed in a foreign commerce. If a nation adhering to the rule of never interposing a countervailing protection of its vessels, admits foreign vessels into its ports free of duty, whilst its own vessels are subject to a duty in foreign ports, the ruinous effect is so obvious, that the warmest advocate for the theory in question, must shrink from a universal application of it.
A nation leaving its foreign trade, in all cases, to regulate itself, might soon find it regulated by other nations, into a subserviency to a foreign interest. In the interval between the peace of 1783, and the establishment of the present Constitution of the U. States, the want of a General authority to regulate trade, is known to have had this consequence. And have not the pretensions & policy latterly exhibited by G. Britain, given warning of a like result from a renunciation of all countervailing regulations, on the part of the U. States. Were she permitted, by conferring on certain portions of her Domain the name of Colonies, to open from these a trade for herself, to foreign Countries, and to exclude, at the same time, a reciprocal trade to such Colonies by foreign Countries, the use to be made of the monopoly need not be traced. Its character will be placed in a just relief, by supposing that one of the Colonial Islands, instead of the present distance happened to be in the vicinity of G. Britain, or that one of the Islands in that vicinity, should receive the name & be regarded in the light of a Colony, with the peculiar privileges claimed for colonies. Is it not manifest, that in this case, the favored Island might be made the sole medium of the commercial intercourse with foreign nations, and the parent Country thence enjoy every essential advantage, as to the terms of it, which would flow from an unreciprocal trade from her other ports with other nations.
Fortunately the British claims, however speciously coloured or adroitly managed, were repelled at the commencement of our commercial career as an Independent people; and at successive epochs under the existing Constitution, both in Legislative discussions, and in diplomatic negociations. The claims were repelled on the solid ground, that the Colonial trade as a rightful monopoly, was limited to the intercourse between the parent Country & its Colonies, and between one Colony and another; the whole being, strictly, in the nature of a coasting trade from one to another port of the same nation; a trade with which no other nation has a right to interfere. It follows of necessity, that the Parent Country, whenever it opens a Colonial port for a direct trade to a foreign Country, departs itself from the principle of Colonial monopoly, and entitles the foreign Country to the same reciprocity in every respect, as in its intercourse with any other ports of the nation.
This is common sense, and common right. It is still more, if more could be required. It is in conformity with the established usage of all nations, other than Great Britain, which have colonies; notwithstanding British representations to the contrary. Some of those nations are known to adhere to the monopoly of their Colonial trade, with all the rigor & constancy which circumstances permit. But it is also known, that whenever, and from whatever cause, it has been found necessary or expedient, to open their Colonial ports to a foreign trade, the rule of reciprocity in favour of the foreign party, was not refused, nor, as is believed, a right to refuse it ever pretended.
It cannot be said that the reciprocity was dictated by a deficiency of the commercial marine. France, at least, could not be, in every instance, governed by that consideration; and Holland still less: to say nothing of the navigating States of Sweeden and Denmark, which have rarely if ever, enforced a colonial monopoly. The remark is indeed obvious, that the shipping liberated from the usual conveyance of supplies from the parent Country to the Colonies, might be employed in the new channels opened for them, in supplies from abroad.
Reciprocity, or an equivalent for it, is the only rule of intercourse among Independent communities; and no nation ought to admit a doctrine, or adopt an invariable policy, which would preclude the counteracting measures necessary to enforce the rule.
2. The Theory supposes moreover a perpetual peace, not less chimerical, it is to be feared, than a universal freedom of commerce.
The effect of war among the commercial and manufacturing nations of the world, in raising the wages of labour and the cost of its products, with a like effect on the charges of freight and insurance, needs neither proof nor explanation. In order to determine, therefore, a question of economy between depending on foreign supplies, and encouraging domestic substitutes, it is necessary to compare the probable periods of war, with the probable periods of peace; and the cost of the domestic encouragement in times of peace, with the cost added to foreign articles in times of war.
During the last century the periods of war and of peace have been nearly equal. The effect of a State of war in raising the price of imported articles, can not be estimated with exactness. It is certain, however, that the increased price of particular articles, may make it cheaper to manufacture them at home.
Taking, for the sake of illustration, an equality in the two periods, and the cost of an imported yard of cloth in time of war to be 9 1/2 dollars, and in time of peace to be 7 dollars, whilst the same could, at all times, be manufactured at home, for 8 dollars; it is evident that a tariff of 1 1/4 dollars on the imported yard, would protect the home manufacture in times of peace, and avoid a tax of 1 1/2 dols. imposed by a state of war.
It cannot be said that the manufactories, which could not support themselves in periods of peace, would spring up of themselves at the recurrence of war prices. It must be obvious to every one, that apart from the difficulty of great & sudden changes of employment, no prudent capitalists would engage in expensive establishments of any sort, at the commencement of a war of uncertain duration, with a certainty of having them crushed by the return of peace.
The strictest economy, therefore, suggests, as exceptions to the general rule, an estimate, in every given case, of war & peace periods and prices, with inferences therefrom, of the amount of a tariff which might be afforded during peace, in order to avoid the tax resulting from war. And it will occur at once, that the inferences will be strengthened, by adding to the supposition of wars wholly foreign, that of wars in which our Country might be a party.
Incomplete draft (DLC).